When is money received from a sponsor as "stipend" paid as a stipend (aid) and when should it be paid to the recipient in the form of salaries?

• Sponsors often refer to payments to participants as "stipends", without regard to how the University plans to make payment. This causes a great deal of confusion, especially in view of strict guidelines prescribed for the University by the IRS when there is an employer/employee relationship created. Basically, the budget should be developed based on whether or not the payment will be for services rendered. If this service creates an employer/employee relationship with the University, the recipient must be placed on the payroll and the budget submitted to the sponsor should include the salary category of expenditure. However, if the funds are intended to be strictly aid payments and services will not be provided to the University, the payment must be as a stipend (aid) payment on a check request and included in the budget to the sponsor as "stipends".